New research from CGA by NIQ has revealed a drop in sales at Australian pubs and bars as inflation and tax-driven price increases stifle consumer demand.

CGA’s analysis of out-of-home drinks trends across Australia, indicates that the average price paid for a 425ml glass of beer has increased by 67 cents or 6.2% in the last 12 months.

Prices for a 30ml serve of spirits—where taxes are much higher—have risen even further, by 93 cents or 8.7%.

Since the start of 2022, beer and spirits prices have gone up by 10.5% and 11.8% respectively.

There has also been a decline in the frequency of people’s visits to pubs, bars and restaurants.

CGA found that 43% of consumers were going out less often than usual. This has led to a 7.7% drop in spirits sales by volume in the 12 months to May.

Beer, malt beverages and cider volumes have been more resilient with a year-on-year increase of 1.4%, suggesting that some consumers may be switching from spirits to beer—a category that is often perceived to offer better value for money. However, beer too is showing signs of pressure, declining –3.1% in the three months to May compared to the same period in 2023.

CGA breakdown of price and sales data shows how the impact of inflation has varied from category to category in the out-of-home sector, including:

• Year-on-year price rises have been fastest in whiskey and tequila, at 10.1% and9.2% respectively.
• Japanese whiskey, cognac and mezcal are currently the three highest priced spirits in Australia—but their sales volumes dropped by between 9.5% and 11.5% in the last year.
• Year-on-year sales of lower-priced spirits including vodka and golden rum have outperformed the category as a whole, as some consumers seek more value.

CGA said sales are likely to be challenged further by a 2% increase in excise tax on beer, spirit and ready-to-drink products from 5 August.

Australia has the world’s third highest level of taxation on alcohol and consumers will now pay an extra 71 cents and $1.25 in excise tax on a schooner of full-strength beer and whiskey on the rocks respectively. 

CGA by NIQ’s client solutions director – total liquor ANZ James Phillips said: “High inflation, the ongoing increases in alcohol taxes and pressure on consumers’ spending are creating a very difficult trading environment for many pubs, bars and drinks suppliers.

“In line with global trends, the spirits category has been hardest hit, with steep tax rises and people’s desire for value leading some of them to other categories or keeping them away from the On Premise altogether.

“With more tax increases imminent sales are likely to remain under pressure for some time, and spending will be increasingly polarised between premium and value drinks.

“With this in mind it’s more important than ever to understand the nuances of sales trends and identify the opportunities for growth, and our sales and consumer research solutions are the starting points for strategies that overcome the market challenges and achieve real-term growth.”